Combating unfair trading practices in the agricultural and food supply chain
Directive (EU) 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain (UTP Directive) creates a minimum Union level of protection against problematic practices applied by buyers in their relationships with their suppliers on the basis of imbalances in bargaining power. The relevant Austrian provisions, the enforcement of which falls within the AFCA’s remit, are contained in the Fair Competitive Conditions Act (FWBG). An explanation and list of unfair trading practices (UTP) can be found below.
Where can I complain about unfair trading practices?
Suppliers who are affected by unfair trading practices may lodge a complaint with the Austrian Federal Competition Authority (AFCA). As the competent enforcement authority, the AFCA has several investigative tools at its disposal. The Authority may, for example, apply to the Cartel Court to have a fine of up to EUR 500,000 imposed on buyers that are in breach of UTP provisions.
At the complainant’s request, the AFCA is obliged to take any precautions necessary to appropriately protect their identity and avoid the disclosure of any information that the complainant believes would be detrimental to its interests. In such cases, the AFCA may refrain from applying to the Cartel Court.
Apart from the AFCA and some other organisations, the institutions listed in § 7 para. 2a FWBG are also entitled to assert claims for a cease-and-desist order:
- Associations that represent the economic interests of companies, producer organisations, other supplier organisations and associations of such organisations if these interests are affected by the subject of the proceedings
- Any company whose legal or economic interests are affected by the subject of the proceedings.
How can I lodge a complaint?
If you wish to submit a complaint with the AFCA, please e-mail us at wettbewerb[at]bwb.gv.at. You may also contact the AFCA anonymously via our whistleblowing system.
Where else can I lodge a complaint?
Suppliers who are affected by unfair trading practices may also contact the Ministry of Agriculture’s Fairness Office, which offers advice and an assessment of complaints anonymously and confidentially.
Further information can also be found in AFCA’s Guidance for fair conduct in business.
What are unfair trading practices?
Prohibited practices are listed in two documents: Annexes I and II to the FWBG. Annex I (“Black list”) lists trading practices that are prohibited in all circumstances, which means they also cannot be agreed contractually.
Annex II (“Grey list”) lists practices that are prohibited, unless they have been previously agreed in clear and unambiguous terms in the supply agreement or in a subsequent agreement between the supplier and the buyer.
Annex I (overview)
- Late payment by the buyer of more than 30 days in case of perishable agricultural and food products.
- Late payment by the buyer of more than 60 days in case of other agricultural and food products.
- Short-notice cancellations of orders of perishable agricultural and food products; with notice of less than 30 days being considered as short notice.
- Unilateral modification of the terms of a supply agreement regarding the frequency, method, place, timing or volume of the supply or delivery, the quality standards, the terms of payment or the prices, or as regards the provision of services insofar as these are explicitly referred to in Annex II.
- Requiring payments that are not related to the sale of the agricultural and food products of the supplier.
- Requiring payments for the deterioration or loss of agricultural and food products that occurs on the buyer’s premises or after ownership has been transferred to the buyer and for which the supplier was not at fault.
- Refusing to confirm in writing the terms of a supply agreement as requested by the supplier.
- Unlawfully acquiring or using trade secrets of the supplier.
- Threatening to carry out, or carrying out, acts of retaliation against the supplier if the supplier exercises its contractual or legal rights.
- Requiring compensation for the cost of customer complaints relating to the sale of the supplier’s products despite the absence of fault on the part of the supplier.
- Granting worse terms compared with competitors of the supplier for an equivalent product or service for non-objective reasons where there is an economic imbalance (relative market power).
- Limiting direct marketing of perishable primary sector goods without objective reasons.
Annex II (overview)
- The buyer returns unsold agricultural and food products to the supplier without paying for them.
- The supplier is charged payment for offering or listing its agricultural and food products or for launching such products on the market.
- The buyer requires the supplier to bear the cost of any discounts on products that are sold as part of a promotion.
- The buyer requires the supplier to pay for the advertising by the buyer of agricultural and food products.
- The buyer requires the supplier to pay for the marketing by the buyer of agricultural and food products.
- The buyer charges the supplier for staff for fitting-out premises used for the sale of the supplier’s products.
Which products are subject to the UTP provisions?
The UTP provisions apply to agricultural and food products. Specifically, all products listed in Annex I of the TFEU (e.g. meat, dairy produce, vegetables but also cut flowers) as well as food made from such products (e.g. fruit yoghurt, chocolate mousse).
Suppliers and buyers
Supplier means agricultural producer or any natural or legal person or groups of such persons (e.g. producer organisations) who sell agricultural and food products (e.g. farmers, processors, retailers/wholesalers). Sales to consumers are not covered by these provisions.
Buyer means any natural or legal person (including groups of such persons) who buys agricultural and food products (e.g. processors, retailers, purchasing alliances, regional or local authorities).
What does imbalance in bargaining power mean?
A suitable approximation for imbalances in bargaining power is the annual turnover of suppliers and buyers. Their size in terms of annual sales determines possible imbalances, with the respective thresholds given under § 5a para. 2 FWBG.